National Debt as a Proportion of GDP Figure
A nation’s debt comprise the sum of all its borrowing and outstanding expense payments to its creditors less its surpluses. The debts includes outstanding government purchases and borrowing through bonds and other treasury securities that the government issues both internal and external.
Expressing the national debts as a proportion of gross domestic product (GDP) shows government total debt relative to its economic activities during the course of that fiscal year. Government debt to GDP ratio increases when its expenditure exceeds its revenue, and decreases when expenditure is less to revenue collected. Government total revenue includes both state and local revenue collected from payroll taxes, individual income tax, sales tax, property tax and other revenue from government investments and agencies. The total expenditure includes all government spending’s, mostly in areas of government purchases, transfer …show more content…
For example, when a nation is owing about $120 billion for the past year, and $100 billion this year. The actual debt figure shows exactly that, irrespective of the fact that debt to gross domestic product (GDP) ratio has decrease. The debt figure alone may also fail to show outstanding government bills that needs to be collected during that fiscal year. While the actual debt figure represents the nation’s budget deficit, its GDP represents the income, that’s the total output of the nation. Relating the actual debt figure to the GDP shows how much the nation is producing in terms of output, and how much the nation is spending. The budget of the nation is said to be balanced when total output equals total spending. And it is said to be in surplus when government spending is less to its total
A nation’s debt comprise the sum of all its borrowing and outstanding expense payments to its creditors less its surpluses. The debts includes outstanding government purchases and borrowing through bonds and other treasury securities that the government issues both internal and external.
Expressing the national debts as a proportion of gross domestic product (GDP) shows government total debt relative to its economic activities during the course of that fiscal year. Government debt to GDP ratio increases when its expenditure exceeds its revenue, and decreases when expenditure is less to revenue collected. Government total revenue includes both state and local revenue collected from payroll taxes, individual income tax, sales tax, property tax and other revenue from government investments and agencies. The total expenditure includes all government spending’s, mostly in areas of government purchases, transfer …show more content…
For example, when a nation is owing about $120 billion for the past year, and $100 billion this year. The actual debt figure shows exactly that, irrespective of the fact that debt to gross domestic product (GDP) ratio has decrease. The debt figure alone may also fail to show outstanding government bills that needs to be collected during that fiscal year. While the actual debt figure represents the nation’s budget deficit, its GDP represents the income, that’s the total output of the nation. Relating the actual debt figure to the GDP shows how much the nation is producing in terms of output, and how much the nation is spending. The budget of the nation is said to be balanced when total output equals total spending. And it is said to be in surplus when government spending is less to its total